The crisis in Greece, or the consequences for Europe
Recently, the world is especially closely watching the development of the Greek script. After all, the future of Europe depends on this scenario. Will the eurozone be able to return to pre-crisis indicators? Or just the beginning? According to experts, what is happening today with Greece is only the result of the changes that have occurred in Europe in recent years. And if nothing is done, then the Greek scenario awaits Italy, Spain and other European countries. However, let's do everything in order.
Why is the crisis in Greece?
Today, many economists often talk about the "cons" of the euro, that the euro is losing its strength. Well, for example, already in 2003, Germany and France violated the clause of the Maastricht Treaty. Let me remind you that it was the Maastricht Treaty, or the Treaty on the European Union, as it is usually called, that laid the foundation for the European Union on November 1, 1993. All countries that joined the European Union approved several provisions: the state budget deficit should not exceed 3% of GDP, and public debt should be less than 60% of GDP.The level of inflation cannot exceed by more than 1.5% the average value of the same indicator of the three most stable European countries, and so on. Just Germany and France were the first to break the 3% state budget deficit rule. Later in the list of violators entered and Italy. In 2007, the country's public debt exceeded 100% of GDP. But according to the agreement on the European Union, the state debt limit is 60%. Over the past 15 years, European countries have violated this rule more than a hundred times.
It is clear that adhering to the terms of the euro zone to member countries has long been difficult. It should be understood that the European Union is a country with different types of economies. The economy of the Nordic countries has always gone along an innovative path of development, increasing its effectiveness. But the southern European countries: Italy, Spain, Greece - have long been accustomed to living in conditions of high inflation. They have always focused on curbing the growth of living standards. With the arrival of the euro, the southern countries had to change priorities. Devaluation could not be allowed. The government quickly shifted to cheap loans. Debts grew, expenses, on the contrary, only decreased. All this foreshadowed the crisis.But for some reason, Europeans did not want to believe it.
Economy and savings
When the crisis struck in Ireland and Greece, the European Union immediately created the Financial Stability Fund, which covered the debts of crisis countries. But one thing is one-time assistance, and the other is constant support, capital inflows. This is precisely what the southern countries needed. The loans drove them into debt. Six years ago, the US government lowered interest rates to zero and “let in” about 4.5 trillion dollars in the economy. The Europeans decided to distribute funds through the Financial Stability Fund. Without the infusion of new money. The result is deplorable - high inflation and rising unemployment.
This year, the European Central Bank has taken steps to repurchase assets of 60 billion euros a month until next year, but, as experts say, this step will not solve all problems. Measures had to be taken earlier. But how to get out of the situation today? The experience of Greece has clearly shown that resorting to austerity is necessary only in the case of expanding the market and increasing exports. According to experts, there is only one way to get out of the crisis: by resolving the problems of public finances without drastically reducing costs.
New way for the eurozone?
If we sum up the external debts of Italy, Spain, Greece, Portugal, then we get a substantial amount - more than 3.5 trillion euros! This is 36% of the entire eurozone's GDP. This debt needs to be restructured in such a way that the situation gets off the ground - the economy needs a good push. The impetus could be an unlimited purchase by the European Central Bank of state obligations, provided that the problem countries give up state borrowings for at least 15 years. This measure would reduce expenses by a factor of 7–8 and, already in 2–3 years, made it possible to reach a balanced budget. If the ECB had bought the papers, he would have “injected” decent funds into the European economy. Investment growth would have increased, and inflation would have gone from zero values.
It is necessary to do so that loans for developed economies become more expensive, and for weak countries they are not needed at all. High inflation would stimulate investment. And the economy would start growing, European exports would increase, real estate prices would increase. The economic center of growth would shift towards the southern countries - Greece, Italy and Spain.And, of course, problem countries need to become more disciplined. In the financial ministries of each country should be representatives of the ECB. For transparency. And understanding that debts still need to be returned. Without serious economic reforms in the eurozone, the most stable currency in the world - the euro - can lose its power. And this is not a joke.